SMEs struggle with pay-rate chaos

Employers are in the dark over paying staff correctly because the national wage setting body, the Australian Fair Pay Commission, has failed to publish pay scales that employers are legally obliged to meet.

The AFPC pay scales replaced most of the old awards when WorkChoices came into effect in March 2006. In December 2006 the AFPC issued a decision updating the pay scales, but published only summaries of 100 pay scales out of the thousands that apply across the economy.

National Retail Association employment law director Susannah McAuliffe says the AFPC’s failure to perform a “basic administrative function” has “left businesses high and dry”.

“Employers are legally obliged to pay according to pay scales, but we’re in never-never land until we see what a revised pay scale looks like — the vast majority haven’t been published and there are things like allowances that don’t simply translate across from awards to pay scales,” McAuliffe says.

Employer groups like the National Retail Association are stepping into the gap to calculate and publish the pay scales, McAuliffe says, but they don’t have the resources to provide the full range of information required across numerous industries.

Professor Michael Shaper, business school head at Bond University, says SMEs in particular are affected by the lack of pay information, which he describes as “a gross problem for employers and employees”.

“It leaves businesses playing a very difficult and expensive guessing game — if business guesses too high they can end up paying more than they need to, but if you pay less you could find in a short time that staff will go elsewhere, especially in the current environment,” Shaper says.

He says that while business owners can try industry groups or commercial pay advisers in order to get pay scale advice, there is no guarantee they will have the information they need.

Shaper says business owners should scour newspaper recruitment ads, talk to colleagues in the industry and even make “mystery calls” to competitors to get a sense of what the industry is paying.

“It’s a bit of a perfect storm — a lack of pay information and a tight skills market means businesses really are left blundering around in a difficult environment,” he says.

— Mike Preston

WorkCover audits hit NSW business

Businesses are being forced to pay hundreds of thousands of dollars in back premiums to NSW WorkCover to cover subcontractors retrospectively deemed to be employees by WorkCover auditors.

The problem arises because it can be difficult to determine whether a worker is an employee or a subcontractor. Employers must pay WorkCover premiums for employees but not self-insured subcontractors.

If a person hired as a subcontractor is deemed by WorkCover to be an employee, their employer is then retrospectively required to pay WorkCover premiums for them.

Late last year the NSW Government responded to the outcry surrounding the issue by introducing a free system through which businesses can apply for a ruling on the status of a worker that can be relied on if there are subsequent legal issues.

But the problem remains. New South Wales Business Chamber general manager of workplace solutions Greg Pattison says a key problem is that there are different definitions of who is an employee for the purposes of workers compensation, PAYG tax and payroll tax.

“In an ideal world, we would have a common definition of ’employee’ for all purposes that would make life more predictable for employers,” Pattison says.

The president of the Small Business Reform Group, June Gibson, says many SME owners are not aware they can face bills for hundreds of thousands of dollars following a WorkCover audit. “There are no goal posts, and because they’re retrospective, businesses often have to look back several years to provide evidence justifying why WorkCover premiums did not need to be paid,” Gibson says.

— Mike Preston

Goodies not before budget time

It is an election year and as the budget approaches, businesses should be expecting a new industry policy — and vision — from the Coalition.

But will we get it? There has not been any big-bang industry statement for years that really ties in many of the areas affecting the SME sector, such as dramatically reducing red tape, building skills to help companies expand and withstand global competition, and encouraging export and innovation.

The bad news is that it appears unlikely any policy will be released until around budget time — May 8. And any measures that might be deemed to cause an increase in the inflation rate will also be scrutinised carefully after the Reserve Bank’s assistant governor Malcolm Edey said on Friday that inflationary pressures in the economy have not eased.

— Amanda Gome

Export Market Development Grants Scheme needs reform

Business groups are keeping up the pressure on the Federal Government over the Export Market Development Grants Scheme, which reimburses SMEs some of their overseas promotion costs.

The Government has failed to spend the amount allocated to it over the past three years, prompting calls to expand the eligibility criteria. The Minister for Trade, Warren Truss, will meet with exporters and industry groups — who also want funding doubled — over the next two weeks.

Rise in US loan defaults triggers concerns

Bank lending policies will come under increased scrutiny because of rising concerns over credit, The Australian Financial Review reports this morning. A blow-out in mortgage arrears and an increase in mortgage sales in the United States has prompted concerns that there could be an impact on wealth and consumer spending, and that lenders should pay more attention to credit control.

The Australian Prudential Regulation Authority’s chairman John Laker says APRA needed to satisfy itself that lenders were taking the signs seriously and were working more closely with regulated institutions to make sure they are on top of the emerging signs.

The major banks in Australia claim they have not experienced any significant rise in arrears, unlike institutions in the US where foreclosures on all types of home loans has risen to a record high.

Economic round-up

The Chinese Government has applied the brakes to its booming economy, raising interest rates 0.27% to an eight year high of 6.39%.

Friday’s 0.4% CPI increase for February in the US, lifting the yearly CPI rate from 2.1% to 2.4%, means the US Federal Reserve will have plenty to think about when it meets to consider whether interest rates should rise or fall this week.

And the S&P/ASX 200 sat at 5866.2 at 12.35pm, up 0.51% from Friday’s close. The Australian dollar is US79.46 cents, down slightly on Friday’s US79.56-cent close.

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